Mass. Delays Auto Producer Reassignments for Further Review

December 1, 2005

Massachusetts Insurance Commissioner Julianne Bowler has asked that a plan for reassignment of auto insurance producers doing business with the state’s residual market, Commonwealth Auto Reinsurers, be delayed.

In response to criticism by several insurers of the proposed formula for redistributing Exclusive Representative Producers, Bowler has advised CAR to provide more information about its proposal by Dec. 16.

Bowler did not say whether she agreed with the criticisms but called upon CAR to provide specifics of its plan for her consideration.

“CAR’s adopted methodology can only be found in various ad hoc committee minutes meetings, all of which are silent on the specifics of the supporting data and the various methodologies reviewed. While CAR has not necessarily erred by arriving at its results in this regard, this sensitive process will be better served by greater transparency and disclosure, she wrote.

The CAR plan is in response to Bowler’s Sept. 30 directive that CAR make reassignments to more evenly and fairly spread the quality and quantity of ERP exposures among servicing carriers.

Bowler acknowledged criticisms of the plan by Plymouth Rock Assurance Company and One Beacon Insurance Company.

“Plymouth Rock contends that the subject methodology fails to consider the impact of the redistribution on consumers and ERPs. It also, allegedly, fails to account for any of the successes that a company may have earned through its fraud fighting efforts and its effective management of its ERP business,” Bowler wrote to CAR President Ralph Iannaco.

Plymouth Rock also raised questions about how loss ratios of ERPs are determined, as did One Beacon.

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